The regulation of cell cycle control in alveolar epithelial type II cells (AEC2) in response to peptide growth factors and extracellular matrix signals is not well understood. Herein, we have determined that, in adult rat AEC2 in primary culture on Engelbreth-Holm-Swarm biomatrix (Matrigel) in the presence of keratinocyte growth factor, the expression of key cell cycle control elements, including cyclins A and D and cyclin-dependent kinases (cdk) 1 and 4, is increased and that retinoblastoma protein (pRb) phosphorylation is also increased, with a corresponding decrease in the expression of p53 and the cdk inhibitors (cdkis) p21WAF1/CIP1 and p27KIP-1 compared with cells cultured on plastic. The Matrigel biomatrix-KGF culture conditions were also associated with an enhanced proliferative response, as measured by fluorescent-activated cell sorter analysis, thymidine incorporation into DNA, and proliferating cell nuclear antigen expression. This enhanced proliferation occurred with neither a soluble extract of Matrigel biomatrix nor with other simple biological matrices. We conclude that coordinated induction of key cyclins and cdks, with the concomitant suppression of key negative cell cycle regulators, occurs in AEC2 on Matrigel biomatrix in the presence of KGF. We speculate that the balance between cyclin and cdk activation and cdki suppression in AEC2 serves to integrate the combined influences of biomatrix and KGF signaling on pRb phosphorylation, thereby controlling transit through S phase of the cell cycle. Conversely, AEC2 express high levels of cdkis and p53 at rest in G1 phase. The latter finding may explain the quiescent state of normal adult AEC2 in vivo.